Roth individual retirement account conversions can save on future taxes. But the strategy can trigger other consequences, experts say.
Roth individual retirement account conversions shift pretax or nondeductible IRA funds to a Roth IRA, which provides future tax-free growth.📺 Los Angeles news 24/7: Watch NBC4 free wherever you areAdditionally, increasing your AGI can have"completely unintended" ramifications, said certified financial planner JoAnn May. She is also a certified public accountant and the principal and co-founder at Forest Asset Management in Riverside, Illinois.
Those earnings thresholds are a cliff and Roth conversion income could push you into the next bracket, experts warn. "The last thing you want is to peak right over that bracket by $1," Lawrence said."Now your Medicare premiums have just jumped up substantially.", or 19.7 million people, were eligible for the advance payments of the premium tax credits, which reduce yearly health insurance premiums by $700 on average, according to the U.S. Centers for Medicare and Medicaid Services.
To avoid eligibility issues, Forest Asset's May said she skips Roth conversions for a client claiming the premium tax credit.
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